I'm struggling to pay all of my bills, what are my options?
Posted on 29th October 2021
Most businesses struggle with cash flow at one point or another, but with the furlough and self-employment income support schemes having been recently closed, many businesses will be facing additional financial hardship.
Whilst it’s easy to focus on the numbers coming in and overlook the numbers going out, poor cash flow can be a serious problem. In fact, one in every four small businesses won’t make it through their first year for this very reason. That’s huge.
If you’re concerned your business could become part of this statistic, then don’t bury your head in the sand. There are steps you can take to get your feet back on the ground, regain stability, and pay off your outstanding debts.
Step 1. Look into short-term financing
Find out whether your business can access any short-term financing, such as a small business loan, cash flow lending, or low-rate credit card offers, including balance transfers. A loan may help your business get through the immediate cash crunch until other forms of small business aid come through, or it could allow operations to continue whilst you restructure. Where you have a loyal following, crowdfunding platforms, such as GoFundMe may also be worth looking into as a short-term financing option.
Step 2. Negotiate with your clients and suppliers
It’s very possible that your clients and suppliers may be facing similar problems and may be open to negotiating lower payments or longer payment terms. In times like these, clients and suppliers will often make exceptions as it can be in their interests to keep your business relationship active. If they are not experiencing significant disruption to their business, then don’t be afraid to ask them for more work, or if they can pay you sooner.
Step 3. Add delivery and/or online options
Sites like Shopify and GoDaddy have made it simple to create websites and take orders online. Think about creating an account and, while you’re at it, create a Google My Business listing too, where you can share your opening hours and other information. The same goes for social media accounts – these are all great ways to let people know that you’re open for business as usual.
Step 4. Make lower credit card payments
In an ideal world, we’d pay our credit cards off in full and avoid interest, but there are times when making minimum payments can help your business get through a time of tight cash flow. If you decide to go down this route, make sure you understand the interest rates you’ll be charged and make sure that these credit cards are used for essential business expenses only. You’ll also need to be aware that high credit card balances may lower your personal credit score, and that if you don’t make your minimum payments then you will be charged a late fee, as well as a hike in your interest rate on your outstanding balance.
Step 5. Talk to your lenders
Be honest. Talk to your lenders. And sooner, rather than later! They aren’t going to want you to default on payments, so if your business can’t pay its bills, they may be able to work with you to restructure your debt temporarily.
Step 6. Call your landlord
Don’t ignore your landlord. It's not a good idea. If you are having trouble paying rent for your business premises, be honest. Explain what’s going on and ask if you can make smaller payments. Some will be able to be more flexible than others, but it’s unlikely that they will be able to easily rent that space, so there’s a good chance they will work with you to avoid it sitting empty.
Step 7. Refinance your commercial space
If you own commercial property with equity, consider refinancing it to lower payments, or even to get cash out of the property to provide a buffer.
Step 8. Consult a credit counselling agency
Credit counselling agencies can help to evaluate your situation and options for paying back your debt. You may be able eligible for reduced payments on some of your credit cards.
Step 9. Consider debt settlement
We’re not saying this comes without its drawbacks — including late fees and interest, or even potential lawsuits from creditors — but this option works for some individuals and small business owners who can’t pay their debts in full. You may even be able to negotiate lower repayments to resolve the debt.
Step 10. Consider bankruptcy
“Bankruptcy... the idea of it fills me with joy”, said no-one ever!
Nobody wants to think of the dreaded B word. However, if you are a small business with bills that can’t be re-paid, consulting with a bankruptcy specialist may be your only choice and may just help answers some questions that are keeping you up at night. Some types of bankruptcy may even allow the business to continue to operate while making smaller payments.
And finally, an important word of advice...
AVOID LOAN SHARKS AT ALL COSTS!
Though they may seem friendly at first, remember, they are illegal lenders who prey on desperate people. Borrowing from them is never a good idea – even if you feel you have no other options.
Made you think? Got you asking more questions? Don’t wait so long for advice that you make expensive, avoidable mistakes. Contact the team at Abaqus on 01452 596765 for further, friendly, impartial advice.
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